The decision of billionaire James Packer to reduce its stake in its Asian-facing casino joint venture Melco Crown Entertainment has reaped rewards as the Australian casino operator Crown Resorts’ full-year net profit jumped by 146.4 percent.
Crown on Wednesday reported chalking up a AU$948.8 million (US$730 million) net profit for the year ended June 30, thanks to the AU$602 million (US$459.55 million) gain from selling down Crown’s stake in its Macau casino business Melco Crown Entertainment (MCE) in May.
From 34.3 percent, Crown’s share of MCE was reduced to 27.4 percent after the transaction. On the other hand, Melco International’s stake rose from 34.3% to 37.9% and the publicly held share increased to 34.7%.
But Crown’s performance was tempered by its share of profits from its stake in the Melco Crown casinos in Macau and one in Manila plunged by AU$103.2 million (US$ 78.78 million), or 64 per cent, to AU$58 million (US$ 44.28 million)
The company also reported in its regulatory filing that ts earnings before interest, taxation, depreciation and amortization (EBITDA) rose by 10.7 percent to AUD861.4 million (US$ 657.57 million).
“The 2016 full-year result reflects a solid performance from our Australian operations and continued subdued trading in Macau,” Crown chief executive Rowen Craigie said in a separate statement posted on the company’s website.
If Crown didn’t reduce its stake in MCE, the firm said that its net profit will drop by 11.8 percent year-on-year to AUD393.6 million (US$ 300.46 million). Normalized net profit after tax, which includes adjustments for expected win rates, was AUD406.2 million (US$ 310.08 million) for the year, down 22.7 percent.
Meanwhile, Crown defended its Macau casinos, which weighed heavily on Crown’s performance and more than offset the steady returns from the firm’s Australian casinos.
Quoting Craigie, The Sydney Morning Herald reported that Crown remains optimistic in Macau gambling industry as casinos shifted focus from VIP gamblers to the mass market.
“I don’t think anyone is saying the VIP levels in Macau is going to return to the levels that we saw three or four years ago,” Craigie said as quoted by the news website. “Macau is a long-term investment. We’re very comfortable about having a presence – it’s still the largest gambling market in the world by a long stretch.”